SIF TRANSILVANIA S.A.

SIF TRANSILVANIA S.A.

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About SIF TRANSILVANIA S.A.

Societatea de Investitii Financiare Transilvania S.A. (S.I.F. Transilvania) is a closed-end financial investment company, self-managed. The company is authorized and supervised by the Romanian Financial Supervisory Authority (F.S.A.), being included in the category of Other collective investment undertakings (NON-UCITS) with a diversified investment policy. The Company is managed in a two-tier management system by an Executive Board which is controlled by a Supervisory Board.

S.I.F. Transilvania is organized as a joint-stock company with entirely private share capital, the shares issued being held by individual and institutional shareholders, both Romanian and foreign. The shares are traded on the Bucharest Stock Exchange (under SIF3 symbol) since November 1, 1999. The shareholders register is kept, under contract and law provisions, by the central depository company  Depozitarul Central S.A. Bucharest.

S.I.F. Transilvania aim is to manage the portfolio investments and to continuously identify investment opportunities under the condition of ensuring a reasonable level of the investment risk, with the view of offering to its shareholders the opportunity of achieving attractive returns and the increase of the capital invested. The investment portfolio consists of stocks, bonds and other investment instruments, the main sectors in which the company holds investments being tourism, financial sector (banking and non-banking), real estate and energy.

The custody and depository services related to the financial instruments held by S.I.F. Transilvania are provided by BRD-Groupe Société Générale. The annual financial statementsof the Companyare audited by the financial auditor (statutory) Deloitte Audit S.R.L. Bucuresti.

S.I.F. Transilvania is a full member of the European Private Equity & Venture Capital Association (E.V.C.A.) with headquarters in Brussels, the Romanian Association of Assets Managers (A.A.F.) as well as of the Brasov Chamber of Commerce and Industry.

SIF TRANSILVANIA S.A.

March 16, 2017 - Our valuation of the SIFs is based on the NAVs reported as of December 2015, to which we apply a fair discount, which we have set at 50%, in line with the historical past five-year average. Our valuations result in HOLD recommendations for all five SIFs. In our valuations, we use the official NAV as reported by each SIF. Given that a large part of the SIFs’
portfolios is invested in Tier-1 companies listed on the stock exchange, the official valuation (last 90 days trading average price) should be a good reflection of the market valuation. For the unlisted part of the portfolios, we use the companies’ equity from their official valuations and, given the lack of detailed data and the large number of small companies in this group, we believe that the valuation based on equity is as good as we can get.

SIF TRANSILVANIA S.A.

April 27, 2016 - We initiate our coverage on SIFs, with an Overweight rating on SIF1 and SIF2, while we issue an Equal weight rating on SIF3, SIF4 and SIF5 as we do not see material upside in those funds currently.
We generally hold a positive view on local banks as well as on Erste, claiming their earnings prospect should remain benign on our expectation. BT already paid an exceptional dividend this year which we do not see the bank to repeat. However, cash returns from financials should be robust as CEE macro remains resilient. This is a crucial point in the investment story as stakes in banks remain significant and reliance on their disposed income is also important.
SIFs are trading at large discount to their NAV (-47.6% on average), due to couple of reasons: (1) lack of liquidity (2) 5% threshold (discussed in next paragraph) (3) initial corporate governance issues (4) unlisted assets in their portfolios.
Shareholding cap puts a strain on market prices so far. The current regulation limits shareholders to own not more than 5% of each fund’s shares. This was already an improvement as the initial cap was 1%. Investors are expecting a trigger in threshold once the SIFs will be registered as alternative funds but the road is still unclear whether this would imply the lift of the cap. Lifting or full elimination of the cap could bring liquidity to the market as well as better corporate governance due to more active shareholders.
SIFs usually use various alternatives to distribute income to investors including stock and cash dividends and share buybacks. Adding up all the income distributions, SIF3 and SIF4 had exceptional yields of 9.7% and 17.5%, respectively, while other funds also had rather high return to shareholders.
We believe that the SIFs should benefit from the uptick in Romanian macroeconomic environment via their investments e.g. in banks or real estate. In addition, the lift of 5% threshold could also be a trigger in share prices, in which case we see an upswing for all SIFs in general.